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Jun 12, 2006 - Issue #010



Devastation



Devastation is about a good word for what happened this past week. Last week, I said that I felt "all Hell was about to break loose". I don't make things happen, folks, I just observe.

The market's going to do whatever the market's going to do, with or without you or me. The only question is: Are we going to ride with it?

OK, what's done is done. The real question is: What now? Is the worst over?

The answer is: I don't know, but I doubt it.

There has been a lot of damage. Investors psyches have been disrupted, to put it mildly. Chaos rules.

At times such as these, people have tendencies to view things as they would like them to be rather than the way they are. You know, "rose-colored glasses" and all that?

And, of course, as always, the buy & hold crowd (you can't miss them, turn on the TV) is doing their "hand holding" thing. After all, misery loves company, don't you know. They're really very good at that, aren't they?

What really matters is: What is the smart money going to do?

In my opinion, if they were smart enough to sell, they will keep on selling until it no longer proves to be the profitable thing to do.

That's the way it usually works, folks. When you find something that works, you keep on doing it until it no longer works. This is trading, not rocket science. Duh?

What is it that successful traders look for as they go about their business? They look for the "line of least resistance". And, when they find it, they exploit it.

So, what is the line of least resistance, these days? If you think it's up, you might be right but make the market prove it.

If it fails in rally attempts, sell into it. You can bet that the smart money will be. Their not being prejudiced, their just being practical.

It's the mirror image of buying on dips and selling on rallies: Sell short on rallies and cover on declines. Beats working for a living. Pays better, too.







Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!

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